Problem

Over-dependency on international financial institutions

Other Names:
Dependence of countries on external financing
Excessive dependence of countries on external budgetary control
Over-dependence of countries on external funding
Reliance of countries on foreign loans
Over-reliance of countries on foreign borrowing
Nature:
There is an excessive indebtedness of many countries to the public and private international financial institutions, and linked with this, a foreign dependency amounting to virtual total subordination to the international financial system and the forces behind it.
Incidence:
Indebtedness has now reached such dimensions (US$ 810 billion at the end of 1983), that the mechanism of debt service now drains the bulk of the economic surplus (that is, the portion of national income otherwise available for net investment) of many countries.
Claim:
Overreliance on foreign borrowing can cause appreciating real exchange rates, widening current account deficits, unsustainable external indebtedness, and dwindling foreign exchange reserves.
Related Problems:
Dependence on customs revenue
Problem Type:
E: Emanations of other problems
Related UN Sustainable Development Goals:
GOAL 8: Decent Work and Economic GrowthGOAL 16: Peace and Justice Strong Institutions
Date of last update
16.03.1997 – 00:00 CET